Govt to focus on domestic production in 25 electronic segments

New Delhi: The government is looking at promoting domestic manufacturing of 25 products including mobile phones, flat panel TVs and notebooks on priority basis.

“Year of 2014 should be year of Made in India. It makes commercial, economic sense to make these products and components in India. If we are able to focus on these 20-25 products then there should be substantial change in electronics industry by December 2014,” electronics and IT secretary J Satyanarayana said at an IESA event.

He released a joint study of Indian Electronics and Semiconductor Association, Ernst & Young and Frost & Sullivan that was conducted on top 25 products, which account for 69 percent of total electronics in the country, and four key components that are required for their production.

The study focussed on the factors that are hindering domestic manufacturing of these products and components.

Top five product categories alone account for 60 percent of the overall electronics consumption which include mobile phones (38.85%), flat panel TV (7.91%), notebooks (5.54%) and desktops (4.39%).

“This report will help us in understanding priority segments. We can streamline tariffs for some products which is difficult when we do it for 1,000 products,” Department of Electronics and IT joint secretary Ajay Kumar said.

The policies announced for the sector so far are broad, he said, adding that the report will help in streamlining efforts to promote domestic manufacturing of these products.

As per the report, higher finance cost is a major factor discouraging the production of top 25 imported products, followed by issues related to taxation, poor availability of components, poor infrastructure and marketing costs.

“It is (higher finance cost) definitely a big challenge. With Electronics Development Fund (EDF), some research and development fund can be reduced. World over companies pay 4-5 percent finance cost but in India we have to about 11-12 percent interest which generates disability in production of products,” IESA chairman Sanjeev Keskar said.

Kumar said government is in advance stages of finalising EDF. Under the National Policy on Electronics, government had proposed that Rs 10,000 crore EDF will help in addressing finance issue plaguing industry, but it is yet to be set up.

Even Walden Fund, with corpus of about Rs 500 crore, has been long pending with the government in which it has to take about 15-20 percent stake.

PTI